For investors looking for high-yield stocks, one of the best sectors to invest in right now is the midstream master limited partnership (MLP) space. The companies in the sector are in strong financial shape and trading at historically attractive valuations.
Given their valuations and solid opportunities ahead, you can invest a meaningful amount into these names, like $10,000, and collect some nice passive income for a very long time. Let's look at three MLPs to invest in right now.
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Western Midstream (9.2% yield)
With an over 9% yield, Western Midstream Partners (WES +0.20%) is one of the most attractive high-yield stocks in the market today. Best of all, this is a company whose distribution is not only in good shape, but is set to rise in the coming years.
NYSE: WES
Key Data Points
The midstream business is capital-intensive, so the companies all carry debt. However, Western has one of the best balance sheets in the sector, with leverage of just 2.8 times last quarter. This allowed it to acquire Aris Water Solutions, as it makes a big push into the produced water solutions business. It is also building out the produced water disposal Pathfinder Pipeline, which it will connect with its North Loving natural gas facilities, which it is currently expanding. This should lead to solid growth in the coming years.
The company is performing well, and it plans to grow its distribution at a mid-single-digit clip.
Energy Transfer (8% yield)
Energy Transfer (ET 1.01%) is in some of the best financial shape it's ever been in, with a solid balance sheet and robust distribution coverage ratio. Meanwhile, about 90% of its business is fee-based with no commodity or spread exposure, and many of its contracts are take-or-pay, meaning it gets paid regardless of whether a customer uses its pipelines or services.
NYSE: ET
Key Data Points
The company is one of the best positioned for the artificial intelligence (AI) infrastructure build-out, given its strong position in the Permian Basin, which produces some of the cheapest natural gas in the country. The company has multiple natural gas takeaway projects from this region, as well as contracts to directly link with data center operators and utility companies looking for cheap natural gas to power AI infrastructure.
Energy Transfer will spend nearly $10 billion in aggregate growth capital expenditures (capex) both this year and next, with an expected mid-teens return. Meanwhile, it's looking to grow its distribution by 3% to 5% a year moving forward.
Enterprise Products Partners (6.8% yield)
While its yield is a bit lower than some of its peers, Enterprise Products Partners (EPD 1.64%) is arguably the most consistent of any company in the space, having raised its payout for 27 straight years. The company has also been conservative, and as such, its balance sheet is in solid shape, and it carries a robust coverage ratio. For the third quarter, its coverage ratio, based on its distributable cash flow (operating cash flow minus maintenance capital expenditures), was 1.5, while its leverage was 3.3.
NYSE: EPD
Key Data Points
Enterprise has a lot of growth projects that have recently come online and are ramping up or are about to begin service soon. That should help power growth in 2026. Meanwhile, the company will significantly reduce capex next year, leading to strong free-cash-flow projections. That will afford the company a lot of capital allocation flexibility, letting it direct money toward buybacks, distribution increases, acquisitions, and/or debt paydown.
With more than 80% of its operating profits coming from fee-based activities and its long-term debt locked in at low rates, Enterprise is a nice, sleep-well-at-night stock perfect for conservative income-oriented investors. It raised its distribution by nearly 4% year over year last quarter, and I'd expected similar increases in the future.
